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Colliers Hua Hin Cha am Residential Report May 2011

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May 2011 | residentialthailandHua Hin, CHa am, and Pranburiresidential rePort Hua Hin, Cha Am, and Pranburi Residential Market ExEcutivE Summary around 10,760 residential units and land plots have been supplied in Hua Hin Cha am and Pranburi up until may 2011 with around 360 units being supplied in 2010. the Hua Hin inland has been the main engine of supply over the past few years due to cheaper land prices and demand for landed property from both thais and foreigners. supply overhang in Hua Hin inland risks being exacerbated by an influx of new supply over the coming years. Foreign demand remains weak for higher end properties and low take up poses difficulties due to slow but ongoing construction activity. retirement communities could be an important niche for the market in the coming years due to retiring babyboomers from europe and an aging thai population. Hua Hin’s mountainous location close to the sea is a compelling one. the growth of new retailing centres in Hua Hin means the district is becoming ever more popular for visitors and Cha am risks being left out of the tourist rush due to the lack of attractions and a centre.www.colliers.co.th

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011ZOninGFor the purposes of research the area is divided into four zones that reflect existing district boundaries.COLLIERS INTERNATIONAL | P. 2

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011hua hin - cOaSt hiStOrical SuPPly By yEar a more rustic feel and is very popular with bangkok neighbour. it has residents taking a weekend break as prices are lower in general andHua Hin is the northernmost district of the province of Prachuap Khiri there is more of a local atmosphere. a number of higher endKhan. it came to prominence in 1922 with the presence of a summer establishments have sprouted up especially in the south, on the borderpalace. since then it has become a magnet for tourists, originally thai with Hua Hin.but with increasing interest from foreign visitors. the coastal area isdefined as being east of Highway 4. this area contains a vibrant mix ofhigher end hotels and restaurants and represents by far the main area PranBurifor entertainment for the whole of Hua Hin, Cha am and Pranburi. Highway 4 snakes away from the coast as it leaves Hua Hin leaving the coastal area of Pranburi, the district south of Hua Hin, more isolated. thehua hin - inland beaches are therefore more tranquil and a feeling of exclusivity has lead to the development of a number of high end resorts along the beachthe area to the west of Highway 4 and away from the coast can be road. While coastal land is at a premium in Hua Hin, Pranburi offers moredescribed as at first low lying land offering cheaper accommodation available land and could be the area of higher end developments.options while the hillside further west can provide coastal and However the further south the road goes the longer it takes to travelmountainous scenery as well as cooler weather. many villas developments from bangkok, making it a less convenient weekend getaway.have been constructed and are popular with foreigners, especiallyscandinavians.cha am cumulativE SuPPly in BanGkOkthis district is in Phetchaburi province and borders Hua Hin to the north.in general Cha am flows at a different pace from its better knownhua hin, cha am, and PranBuri rESidEntial markEt hiStOrical SuPPly Of cOndOminium and landEd PrOPErty unitS and land PlOtS By yEar, may 2011 source : department of land and Colliers international thailand research remark : the number in above figure were included condominium, house and villa projectthe first residential projects in Cha am, Hua Hin and Pranburi started in was added in the market. the next wave of growth occurred in 2003 as1994 and then grew by approximately 1,000 units per year in 1995 and the economy strongly recovered and thai buyers became a very strong1996. thailand‘s economic crisis in 1997 put a halt to the nascent force in the market due to the proximity to bangkok.property market in the area and in the years 2001 – 2002 no new supply COLLIERS INTERNATIONAL | P. 3

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011 hiStOrical SuPPly By lOcatiOn and yEar source : Colliers international thailand researchup until the beginning of the new century the vast majority of residential often with a sea view that were in the higher priced brackets and targeteddevelopments occurred in the coastal areas of Hua Hin and Cha am. european buyers. at the end of the last decade the Hua Hin inland areaHowever as land prices increased after the recovery from the asian is one of the key locations for development. in the last few years PranburiFinancial Crisis, developers looked elsewhere for suitable land and hence has started to appear on the map and its relative isolation means that itthe growth of the inland areas of Hua Hin. either these were in the less caters to a different market from other areas. many scandinavians areattractive lowland areas catering to lower income buyers or in the hills attracted to the empty beaches. hiStOrical SuPPly By PrOPErty tyPE and yEar source : Colliers international thailand researchCondominiums represent by far the main source of supply in the Hua Hin homes for thais. Coastal locations have always been most sought after- Cha am - Pranburi area. landed development only really took off in and therefore high land prices mean that condominiums become the2006 after developers looked at land away from the coast and into the most feasible option.hillsides targeting the foreign market for villas and affordable secondCOLLIERS INTERNATIONAL | P. 4

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011 currEnt SuPPly By lOcatiOn, may 2011 source : Colliers international thailand researchthe total supply of residential units in Hua Hin, Cha am and Pranburi is approximately 6,100 units, while more than 4,200 units are located inmore than 10,700 units. Hua Hin contains the highest numbers with Cha am and only around 430 units in Pranburi.cOndOminium markEt hiStOrical SuPPly By yEar, may 2011 source: department of land, Colliers international thailand researchno new supply was completed during the first five months of 2011 and less than a hundred. this was due to the increasing land price as well asthe total number amounts to approximately 7,100 units a more conservative approach from developers in the wake of the previous boom and bust of the property market in the late 1990’s.an average of 200 units per project was developed during the years1995 – 1999. since 2003 the average number of units per project fell to COLLIERS INTERNATIONAL | P. 5

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011 hiStOrical SuPPly By lOcatiOn and yEar, may 2011 source : Colliers international thailand researchthe total supply of condominium units is approximately 7,100 units with coastal areas account for the popularity of condominium units by the seaHua Hin and Cha am showing a similar proportion but only 2% of the compared to the inland area which is more popular for landedsupply is located in Pranburi. the high cost of land in the sought after developments.COLLIERS INTERNATIONAL | P. 6

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011 cOndOminium unitS availaBlE fOr SalE, aS Of may 2011 source : Colliers international thailand researchthere are approximately 2,200 condominium units available for sale supplied and launched.from a total of around 5,900 units from a total of 49 projects bothunitS launchEd cOndOminium unitS launchEd durinG thE yEar 2005 – 2011 By lOcatiOn source: Colliers international thailand research remark : the information of units in 2011 is until maythe prestigious nature of Hua Hin coupled with high land prices means bangkok Cha am has a less cohesive personality than its neighbourthat condominiums are hugely popular as the main source of purchasing partly due to its size and has struggled to define itself. the southern parta sought after address in Hua Hin. many are located a street away from of Cha am resembles Hua Hin while the northern part is very local inthe beach due to the limited availability of land plots. character and attracts many day visitors. also the centre of Hua Hin has developed into the shopping and entertainment hub over the past fewinterestingly the inland area of Hua Hin has been more popular for years.developers than Cha am in the past few years. although closer to COLLIERS INTERNATIONAL | P. 7

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011futurE SuPPly cumulativE futurE SuPPly SchEdulEd tO BE cOmPlEtEd durinG thE yEarS 2011 – 2013 By lOcatiOn. (aS Of may 2011) source: Colliers international thailand researchmore than 4,800 units are scheduled to be completed by 2013 in every a significant number of plots have been landbanked by large bangkoklocation, around 2,700 units in the Hua Hin Coast area, 1,200 units in based developers and many are awaiting the right time to launch ontoHua Hin inland area, 850 units in Cha am and only approximately 30 the market. the Khao tao area on the southernmost border of Hua Hinunits in Pranburi. contains many plots ready to be developed at some point.Hua Hin is the preferred location now for condominiums due to its statusand increasing range of entertainment options compared with Cha am.many thais usually from bangkok are significant buyers of units in HuaHin as a location for a second home.COLLIERS INTERNATIONAL | P. 8

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011takE uP ratE takE uP ratE Of all cOndOminium PrOjEctS in thE markEt, aS Of may 2011 source: Colliers international thailand researchtake up rates are similar for Hua Hin and Cha am and there are still many projects in Hua Hin inland are targeted for the foreign market andunsold units in projects supplied a number of years ago due to the the recent financial troubles coupled with domestic political concernssudden influx of supply coinciding with the beginning of the Global and weakening exchange rates have conspired to make selling difficultFinancial crisis. the low level for Pranburi is due to the fact that the for many of these units.projects are newly launched. COLLIERS INTERNATIONAL | P. 9

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011PricE avEraGE SEllinG PricE Of cOndOminium unit availaBlE fOr SEll in cha am, hua hin and PranBuri source: Colliers international thailand researchthe average selling price in the Hua Hin Coast area is the highest at as many of the projects are located closer to the sea than in Hua Hin andmore than tHb 78,000 per sq m., although the maximum selling price in in close proximity to the centre. Hua Hin inland has lower prices due tothe area is approximately 150,000 per sq m and the minimum price its distance from the coast and the less well known developers while thestarts at tHb 46,000 per sq m. Cha am records a similar average figure remoteness of Pranburi accounts for the lower prices in that district.COLLIERS INTERNATIONAL | P. 10

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011hua hin, cha am, and PranBuri markEt fOr hOuSinG and land PlOtS in dEvElOPmEntSnote: this report consists of research in regards to multiple housing developments. individual housing is excluded. hiStOrical SuPPly By yEar, may 2011 source: department of lands and Colliers international thailand researcha surge in supply in 2006 and 2007 can be attributed to the effect the markets, especially samui and Hua Hin district. the effect was atsunami in Phuket had on the real estate market in other resorts. after considerable addition of supply in a matter of a few years and this camethe devastation on 26 december 2004 many developers, mostly at the start of the revival in the Phuket market and the beginnings of thespecializing in landed property, turned their attention to other resort Global Financial Crisis. COLLIERS INTERNATIONAL | P. 11

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011 hiStOrical SuPPly By lOcatiOn and yEar, may 2011 source: department of lands and Colliers international thailand researchHua Hin inland contains the lion’s share of housing and land plots due to and later the development of smaller housing units in less expensivehigh land costs in the coastal area. there has been a surge in supply locations catering to the affordability end of the market targeting localfrom 2003 until 2009 due to confidence in the market after recovering Hua Hin residents and bangkokians seeking a second home.from the asian Financial Crisis. also most european currencies werestrong compared to the baht in the early 2000’s prompting demand from Hua Hin Coast is limited to small villa components of condominiumeurope for inexpensive homes in a tropical country. this surge continued developments as high land prices make exclusive landed developmentson the back of renewed interest following the Phuket tsunami in 2004 unfeasible. hOuSE , villa and land PlOtS availaBlE fOr SalE in thE markEt By lOcatiOn, aS Of may 2011 source: Colliers international thailand researchHua Hin inland contains by far the greatest number of available housing number in Hua Hin inland means that there are many units to be absorbedunits as they are located away from the coast to the west of Highway 4 by the market and older, unmaintained units may now be difficult towhich provides a boundary between coastal and inland areas. many sell.cheaper units are located on the hillside overlooking the coast. the highCOLLIERS INTERNATIONAL | P. 12

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011GhOSt tOwnS and cOnStructiOn SitESthe image of a villa in a pleasant community in the mountains overlooking some developers are also focusing too much attention on sales andthe coast of Hua Hin might be a picture of paradise. However this image construction with rental programmes being an afterthought and thiscan be put sharply out of focus due to awkward phasing of the project could spell problems in the future. the main concern is that buyers doand the neglect of a proper rental system. not put their units into a rental programme and then only visit their properties for a few weeks a year in many cases. When many buyers actthe first problem relates ironically to an event that happened far away in in a similar fashion then for most of the time the development will bePhuket in 2004. after the tsunami that ravaged the island many deserted and for any resident or renter who remains this can be adevelopers turned their attention to alternative resorts, especially samui depressing experience. residents like to be in a quiet and peacefuland Hua Hin. this led to much land acquisition and the launching of new environment but not a deserted one and the atmosphere can becomeprojects including villa developments in the hillsides. However Phuket eerie and such a ghost town effect will create a vicious circle with thebounced back, western currencies fell and lehman brothers happened. remaining residents packing their bags.this pulled the rug under the market and developers were left with a mixof completed and partly constructed units and plenty of unsold land. the a proper rental programme should be put in place from the start andmarket has picked up and people are buying again but not to the same buyers urged to take this up or even in some cases buyers having onlydegree. there are concerns with the livability of various projects. the the option of a pooling system with a time limit put on their own use ofmarket is likely to simmer for some years and there is likely to be ongoing the property. another option is for a certain number of units to beconstruction within projects for some time to come. What this means is retained by the developer or an investor for rental purposes only.that an occupier of a villa will have the vision of his “paradise” homebeing surrounded by rebar, cement and construction workers for theforeseeable future.unitS launchEd hOuSinG and land PlOtS in dEvElOPmEntS unitS launchEd durinG thE yEar 2005 – may 2011 By lOcatiOn source: Colliers international thailand research remark : the information of unit in 2011 is until mayForty four percent of total units were launched in 2008, especially in the developers often build to order and the slow take up means that manyHua Hin inland area. this occurred at the same time as the onset of the projects can resemble ongoing construction sites and this will likely beGlobal Financial Crisis and a fall in european exchange rates. this has the situation for some time to come which is not in the interests ofmeant that many units remain unsold or land plots still remian vacant. existing tenants. this presents developers with a difficult dilemma. COLLIERS INTERNATIONAL | P. 13

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011futurE SuPPly cumulativE futurE SuPPly SchEdulEd tO BE cOmPlEtEd durinG thE yEarS 2011 – 2014 By lOcatiOn. (aS Of may 2011) source: Colliers international thailand research remark : the year completion was expected by developers.approximately 2,000 units were scheduled to be completed in 2014 in all are smaller, lower end products catering to the thai domestic marketlocations and 80% are located in the Hua Hin inland area. With a and this could prove popular with middle class thais seeking an affordablecurrent glut of supply in the Hua Hin inland area the addition of new landed property. this could be an attractive option to counterbalance thestock will present more problems. However many new developments condo lifestyle in bangkok.COLLIERS INTERNATIONAL | P. 14

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011takE uP ratE thE takE uP ratE Of all PrOjEctS in thE markEt By lOcatiOn, aS Of may 2011 source: Colliers international thailand researchthe take up rate in the Hua Hin Coast area was the highest, but only as well as easy access to golf courses.around 230 units are available in this area and 56% of these werelaunched in 2008. approximately 56% has been taken up in the Hua Hin a lot of people who bought houses in the Hua Hin inland area wereinland area from the total around 2,000 units and 57% in Cha am area foreigners who often come to stay for only one to two months per year.from a total of around 160 units. more than 1,100 units were sold in Hua most of the foreigners who have a house in Hua Hin are from europeHin inland area and although there is no beachfront, many have proved such as british, swedish, norwegian and swiss and some of them arepopular due to price, a sea view location and cooler climate in the hills already retired.fOrEiGn EnclavESit sounded like a recipe for success. develop a villa development on landin the hills above the coast of Hua Hin and target mostly one nationality.Hence little swedens and norways were created which allowed foreasy communication through a common language and a feeling oftogetherness. the reality is somewhat different as these communitiesare somewhat isolated and residents’ social lives can often be limited toa small group of people and personality clashes result. Within thecommunities there can be peer pressure to act the same way like they doin their own countries. People chose to live away from their homecountry for many reasons and escaping from the confines of their homecountry is one of them but they end up out of the frying pan into thefire.in fact high net worth individuals tend to gravitate towards multinationalprojects even into retirement. one retirement development called theFalls actively encourages this. such buyers are normally very internationalin perspective and comfortable in more than one language. they aremore than happy living with people from different nationalities due totheir previous cosmopolitan lifestyle and this enhances their experienceof living in such communities. With such nationality based developmentsstarting to be out of flavour, residents find it tough reselling their units.it would be difficult selling a unit in little sweden to someone outside thatcountry for example. COLLIERS INTERNATIONAL | P. 15

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011PricE avEraGE SEllinG PricE Of hOuSE and villa availaBlE fOr SEll By lOcatiOn source: Colliers international thailand researchthere is a great difference in the selling price in Hua Hin at the maximum building sizes while at the high end villas are located at the coast inand minimum end of the market. the low end relates to units located on usually mixed condominium/villa projects and such units command alow lying land away from the coast with relatively small land plot and premium.COLLIERS INTERNATIONAL | P. 16

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011tOuriSm viSitOrS BOOkEd intO hOtEl rOOmS in cha am and hua hin By quartEr source: office of tourism development and Colliers international thailand researchtourism, both international and domestic, is a portent for future demand a modern large scale shopping centre in the form of Hua Hin marketfor residential properties as visitors are attracted in purchasing a second Village, the iconic Plearn Wan which recaptures historic Hua Hin and thehome for a winter getaway from europe. Cha am has been the more popular Hua Hin night market which attracts the bangkok weekendpopular destination in the past as this district offers cheaper crowd. as a result many thais now flock to Hua Hin and Cha am is beingaccommodation catering for the thai domestic travel market. However left behind in terms of attractions.as Hua Hin is increasingly developing its infrastructure and now includesintErnatiOnal tOuriSmCompared to other resorts, including Pattaya, Hua Hin and Cha am therefore in terms of the foreign market the area is dependent on astrongly appeal to the local market rather than international travelers. small number of countries that could continue to be prone to weakJust over 68% of visitors who stayed in hotel rooms in Hua Hin in 2010 currencies but on the other hand Hua Hin and Cha am can rely on thewere local. of the 329,300 foreign contingent around 145,000 are from resurgent domestic market.scandinavia with the vast majority of tourists hailing from europe.thE Scandinavian cOnnEctiOn in hua hinthe district of Hua Hin is particularly attractive to scandinavian visitors and also prefer the outdoor lifestyle, which would lead them to Hua Hinaccounting for nearly 44% of foreign hotel guests in 2010. also in terms rather than the other more commercial resorts in thailand.of residential purchases this group accounts for the biggest marketalthough interestingly sweden, norway and denmark represent a as a result not only are many scandinavians purchasing property in Huasignificant buying market but not Finland, despite recording the highest Hin but also a number of developers hail from the region. the socialnumber of visitors out of the four countries. security systems in these countries allow for generous retirementthere are a number of reasons for the connection; scandinavian travel provisions and this will mean that many of the retiring babyboomers inoperators were particularly active in Hua Hin in the 1990’s and the scandinavia will have the capital to buy a second home in order toswedish monarch Carl XVi Gustaf makes regular visits to Hua Hin thus escape the arctic winter weather. this will be an exciting market for Huacementing a strong bond between the two countries. in general Hin in terms of buying property for many years to come.scandinavians tend to be more family orientated but independent minded COLLIERS INTERNATIONAL | P. 17

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Hua Hin, CHa aM, and Pranburi residential MarKet rePort | maY 2011SwOt analySiSStrEnGthS due to the long distances involved in travelling in Hua Hin – Cha am - Pranburi, it is difficult for residents to get around without access to a car.Hua Hin – Cha am can be reached from bangkok within two hours and Public transport is limited so many potential residents are put off by theis therefore accessible for a weekend getaway for residents in bangkok prospect of isolation.and expats seeking an escape from the big city. Hua Hin- Cha am still has a less international profile than other resortsthe climate is generally seen as preferable to that of other resorts with in thailand to attract tourists a d eventually residents, although over theless precipitation during the rainy season. Hua Hin has half the amount past few years this situation has been changing.of rainfall on average over the course of a year compared to samui orPhuket and a third less than bangkok. the lack of an international airport means than foreign travellers would need around three hours to reach Hua Hin from suvarnabhumi airportthe whole length of coastline contains sandy beach, often isolated and this hampers the area as a destination for foreign tourists especiallyespecially during weekdays. this is a premium over other resorts that from short haul countries such as singapore or Hong Kong.can be packed out throughout the week. the quality of developments varies widely throughout Hua Hin-Cha amthe existence of a summer palace adds kudos to the district of Hua Hin - Pranburi and poor and incomplete projects create a lack of confidenceand where the prosperous once built their second homes people of from potential buyers that affects the local property market as a whole.newly acquired wealth in bangkok now wish to reside there partly as a large listed developers tend to benefit from this due to their reputationform of status as well as the peaceful location. forged in bangkok.a significant number of Foreigners are repelled by the commercialism of significant launches dating back from the 2005-7 period have manyother resort areas and are attracted to Hua Hin – Cha am due to it being units still unsold especially for villa developments inland and there is afar more local in character compared with Phuket or Pattaya for example. significant amount of inventory and land plots still available. this createsHowever Hua Hin, in particular, still contains enough western creature problems for residents in these ongoing projects due to continuedcomforts. construction.many developers are focusing on the affordability end of the market withcondo and small villa prices below 3 million baht that have been very OPPOrtunitiESattractive to thai buyers in particular. the existence of a marina in Hua Hin – Cha am would invigorate the area as a premier high end resort destination and enhance its internationalHua Hin is being recognized internationally as one of thailand’s premier profile. it would also allow greater sea access from the eastern seaboard.golfing destinations. the black mountain masters is the first local Plans for a marina have been mooted for some time but have yet to cometournament that forms part of the asian tour and the inaugural tournament to fruition.was held in 2009 at the black mountain Golf Club. other renownedcourses in the area include royal Hua Hin, banyan, Palm Hills and Hua Hin provides one of the best locations for retirement communitiesspringfield. due to the mountainous terrain overlooking the sea and the district could be a magnet for retiring babyboomers from europe and Japan over thewEaknESSES next 20 years.land prices, especially in the coastal areas tend to be expensive. this is many bangkok residents are entering the 50-60 age group which meansforcing developers to raise prices and thus making it harder to sell their greater disposable income and capital due to inheritance. this interestingunits. lower rise condominiums are being constructed to take account of and wealthy market would be a great source of demand for a secondthis. home and Hua Hin would likely be a greater magnet than Pattaya due to the more refined nature of Hua Hin and the status that having an addressthere is no proper international school in the whole of the area. this is there confers.a significant weakness and very surprising as there is likely to be strongdemand for such an establishment in such a highly regarded area. manybangkokians as well as expats would consider seeking a second home if thrEatStheir children were being educated there. any truly international the current political situation and possibilities of renewed dislocationsresidential area requires international hospitals and schools. remain a cloud for Hua Hin due to its proximity to bangkok. However the strong domestic foundations for tourism and residence make the areaunlike Phuket, Pattaya and samui; Hua Hin contains no significant sized more resilient to any further problems.bays which can aid access and create an identity for the differentlocations of a particular resort destination. many can associate with in terms of foreign demand, the area relies on nationals from Westernsuch areas such as Chaweng, Kata and Jomtien in other resort europe and this market has been hit by the global financial crisis anddestinations but this becomes much harder in Cha-am for example. this weakening exchange rates which could continue to dampen the marketa common problem for long stretches of beach such as mui ne in over the coming few years.Vietnam. in Cha am and Pranburi there is no real centre that couldcontain commercial areas and a transport hub this lending the area acertain focus and character.COLLIERS INTERNATIONAL | P. 18